Demonstration: Producer-Controlled Marketing

I am inviting qualified investors to help us organize and market organic pasture-raised meat and poultry in the Omaha area. Our two Omaha-area farms will host events and learning sessions on animal care, pasture management, marketing and accounting systems for investors, farmers and retailers.

We will start with specialty beef. These cattle are raised on natural and organic feed without hormones, antibiotics and GMO’s.  Calves and yearlings from eastern Nebraska and western Iowa will be sold through our independent marketing partnership.

Two-Step Marketing Strategy

The immediate goal is to improve cow-calf profits using short-term forward contracts with feedlots and packers who already sell to major grocery and food service companies. We must maintain good relationships with these key supply chain members because they represent our only near-term cash flow. Our long-term goal is to convince large numbers of Omaha and Kansas City consumers to buy their beef from “diversified” organic farmers and ranchers who are rebuilding local soil, water and wildlife resources.

Governance and ROI

The bylaws for our partnership will require the board members (producers and investors) to make all major decisions on budgets, marketing strategies and the distribution of income and profits. Liens on land, livestock and equipment will not be accepted.

Board members will receive periodic, confidential reports on sales, income and expenses for specific commodities, direct sale and retail products. These reports will estimate the percentage of farm income from each product.

Based on previous capital investments in land, livestock, buildings and equipment, producers will vote the majority of the partnership shares. However, investors will be first in line for negotiated shares in partnership profits because we are asking them to finance a new and risky marketing venture. The goals are to improve margins by increasing herd sizes while reducing unit costs for production, marketing and processing.

Each member will have one vote. The idea is to prevent large producers and investors from controlling the board. We will also limit the number of small farmers who might organize votes that discourage participation by investors and larger producers.

“Open Books”

To foster a more transparent business environment in local and regional agriculture, our operating partners will receive regular “open books” reports that summarize confidential financial and operating information. Our operating partners will include processors, distributors, retailers and government agencies.

Local Control while Working Within the Food System

Our approach puts farmers and investors at the same table to build economies of scale in commodities, and eventually food processing for high-value local and regional brands. Local control, combined with sound market information and long-term business relationships among producers, investors and food processors will position all concerned to move toward retail sales. Ultimately, meaningful profit opportunities for producers, processors and investors depend on competing with imported specialty foods, and at the same, maintaining good relationships with established commodity buyers who sell to food manufacturers that supply food chain retailers.

Building Capacity

I am in discussions with independent cattle buyers who are interested in using standard forward contracts to sell partnership beef. Short-term forward contract(s) will be negotiated with Omaha area feeders and packers who already buy specialty beef.

As noted above, our near-term goal is to build local supplies lines by becoming a reliable supplier of high quality, competitively priced specialty beef. The partnership members will approve the contract, or return it for further negotiations. The project will be suspended if we are unable to negotiate a contract.

In addition to highlighting potential profit opportunities for producers and investors, we intend to point out new business opportunities for specialists with practices in the following disciplines:

• Insurance, risk management and succession planning
• Donor-advised and impact investment funds
• Local and regional economic development
• Full service marketing
• Banking
• Technology, including genetics, water and energy conservation

Farmer-Owed Retail Brand

Once we have established our local supply lines, we will begin to develop a partnership brand of pasture-raised specialty beef, pork and poultry for Omaha-area retail markets. Our goal is to rebuild vital pasture and rangeland in the Omaha area by forming lasting relationships with large numbers of near-by urban consumers.

I would appreciate an opportunity to discuss the partnership’s beef marketing plans.

Jim Steffen